Sales of Existing U.S. Homes Fell as Forecast in September

A Standard Pacific Homes sold sign stands in front of a home in Durham, North Carolina. Photographer: Jim R. Bounds/Bloomberg

Oct. 20 (Bloomberg) -- Sales of existing homes fell in
September, extending a pattern of declines and gains that show
the industry continues to be buffeted by consumer pessimism and
unemployment above 9 percent.

Purchases dropped 3 percent to a 4.91 million annual rate,
matching the median forecast of economists surveyed by Bloomberg
News, figures from the National Association of Realtors showed
today in Washington. The median price dropped 3.5 percent from a
year ago and about one in five real-estate agents polled said
contracts had been canceled, the group said.

Growing pessimism about the economy, unemployment above 9
percent and limited access to credit are keeping some Americans
from taking advantage of near record-low mortgage rates.
Foreclosures that are adding to the supply of homes for sale and
driving down prices remain a hurdle for an industry that’s made
little progress more than two years after the recession ended.

“Any recovery is going to be long and arduous,” said
Anika Khan, an economist at Wells Fargo Securities Inc. in
Charlotte, North Carolina. “With cancellations and distressed
sales so high, we’ll continue to see downward pressure on
prices.”

The median forecast was based on a survey of 78 economists.
Estimates ranged from 4.7 million to 5.1 million.

Fewer Claims

The number of Americans filing claims for unemployment
benefits declined last week to a level that shows little
improvement in the labor market since the start of the year, a
report from the Labor Department showed today. Applications
dropped by 6,000 to 403,000 in the week ended Oct. 15. Claims
had been as low as 375,000 in February, the month employers
added 235,000 workers to payrolls.

Other reports showed manufacturing in the Philadelphia
region unexpectedly expanded in October and the index of leading
economic indicators rose 0.2 percent last month.

Stocks fell on concern over European debt talks. The
Standard & Poor’s 500 Index decreased 0.5 percent to 1,203.31 at
11:55 a.m. in New York.

The median price of a previously owned home fell to
$165,400 from $171,400 in September 2010, today’s report showed.

Existing-home sales, tabulated when a contract closes, rose
15 percent from the same month last year before adjusting for
seasonal variations. Total sales in 2010 were 4.91 million,
compared with a peak of 7.07 million in 2005 during the housing
boom.

Less Inventory

The number of previously owned homes on the market fell 2
percent to 3.48 million. At the current sales pace, it would
take 8.5 months to sell those houses, up from 8.4 months at the
end of the prior month.

Month’s supply in the seven months to eight months range is
consistent with stable home prices, the group said.

The market “is in a holding pattern,” Lawrence Yun, the
group’s chief economist, said in press conference.

Contract cancelations were reported by 18 percent of the
group’s members in September, the same as in the prior month.
The level is at least twice as high as under normal
circumstances, said Yun. The cancelations reflected mortgage
applications that were refused or because appraised home values
were coming in below the sales price, the group said.

The agents group’s annual effort to benchmark its sales
data is “taking longer” than originally estimated, said Yun.
He said courthouse data on sales that the NAR was reviewing was
“messy” due to double-counting in some cases and “fuzzy”
documentation. “I think it will be a measurable downward
revision,” he said. “All the factors are indicating there is
an over-count.” At the earliest, he said, the results would be
announced “possibly within a month.”

Houses, Condos

Sales of existing single-family homes decreased 3.6 percent
to an annual rate of 4.33 million. Purchases of multifamily
properties, including condominiums and townhouses, climbed 1.8
percent to a 580,000 pace.

Purchases dropped in three of four regions, led by an 8.8
percent decrease in the West. The West is probably the area most
affected by the recent reduction in conforming loan limits, Yun
said. Sales in the Northeast gained 2.6 percent, perhaps
reflecting a rebound from Hurricane Irene, he said.

A glut of distressed properties on the market is holding
down prices, keeping housing from contributing to the economic
rebound. Unemployment has been 9.1 percent for the last three
months, wages are stagnate and stock prices have dropped this
year on concerns about a European sovereign debt default and
recession.

Scottsdale, Arizona-based Meritage Homes Corp., which
builds energy-efficient single-family homes, saw its sales in
the quarter ended in September rise from a year earlier even as
demand remains at “depressed levels,” executive vice president
Brent Anderson said on an Oct. 12 conference call.

“We need to have more people in jobs, good, well-paying,
full-time jobs,” Anderson said. “It’s really a matter of
confidence.”